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MARKETS IN A NUTSHELL

WORLD

EQUITIES

Global equity markets rallied strongly after the Q4 2018 sell-off — US markets enjoyed their best first quarter return in 20 years

BONDS

US 10-year bond yields fell sharply as investors reacted to the US Federal Reserve’s policy U-turn — the US yield curve briefly inverted as bond prices rallied

CURRENCIES

The US dollar weakened after the Fed’s U-turn — but resumed its gains latterly

COMMODITIES

The oil price rose on supply disruptions from Venezuela, further Saudi-led OPEC production cuts and a surprise US stockpile decline — while iron ore surged on severe supply disruptions following a Vale tailings dam failure in Brazil

ECONOMY

Despite continued US economic strength, the broader macroeconomic environment deteriorated — European economic weakness and fears of slower Chinese growth compound late cycle growth concerns

MONETARY AND FISCAL POLICY

The Fed’s new dovish policy stance signals concern for global economic health — it announced that no further interest rate hikes are likely in 2019 and that it will slow the pace of quantitative easing withdrawal

SOUTH AFRICA

EQUITIES

The FTSE/JSE Capped All Share Index also rose, led higher by resource counters on commodity strength and rand weakness — but industrial and financial counters declined on economic headwinds

BONDS

SA government bond yields tracked global yields lower amid renewed risk appetite — the SA All Bond Index posted positive returns

CURRENCIES

The rand weakened on US dollar strength — but recovered at quarter end as Moody’s delayed its credit rating review

COMMODITIES

The oil price rose on supply disruptions from Venezuela, further Saudi-led OPEC production cuts and a surprise US stockpile decline — while iron ore surged on severe supply disruptions following a Vale tailings dam failure in Brazil

ECONOMY

Economic growth was marginally positive, but stressed as shown by Mboweni’s downbeat budget and the return of erratic Eskom load shedding — the looming elections make meaningful economic reforms improbable in the near term

MONETARY AND FISCAL POLICY

SARB revised down its 2019 forecast for economic growth and inflation, but kept interest rates steady — high real yields are an attractive investment opportunity but they are too restrictive, raising the possibility of a repo rate reduction later this year

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